In this guide
Benefit-in-kind tax
Private use of a company car usually creates a taxable benefit for the employee. The calculation uses the car’s tax price, its emissions and its fuel type. Plug-in hybrids also depend on electric range and emissions data.
Fuel benefit and reporting
If the company pays for fuel used on private journeys, a separate fuel benefit charge usually applies unless the employee repays the full cost of all private fuel. Report car and fuel benefits through payroll where benefits are payrolled, or on a P11D after the tax year ends.
Company tax and capital allowances
The company may claim capital allowances based on the ownership and the car’s emissions. A lease follows different rules from a purchase, and cars do not qualify for the Annual Investment Allowance.
VAT and lease costs
VAT recovery depends on the purchase or lease, private use, and whether the business can meet the evidence requirements. A lease car often has a 50% restriction on the VAT element, but the exact treatment depends on the facts.
Fuel, mileage and records
Keep mileage logs, fuel receipts, charging records, the vehicle details and the dates of availability. HMRC advisory fuel rates change during the year, so label any rate used with its effective date.
Official sources
Rates and deadlines can change. Use these links to check a rate, deadline or eligibility rule.
Choosing a company car or lease?
We can map the purchase, lease, VAT, payroll and benefit-in-kind points before you decide.
Discuss the vehicle costs